Annual report / Alberta Opportunity Company

24 Pages·1994·1.9 MB·English

by  Alberta Opportunity Company

JM 20 199;
CANALHAWA
1993-1994
Annual Report
"There is h ereby established a fund under the name of
the Alberta opportunity Fund, the total amount of which shall
not exceed $300,000,000 and which shall be held and
administered by the company with the object of promoting
the development of resources and the general growth and
diversification of the economy of Alberta. The Board has the
direction and control over the conduct and affairs of the
Company."
Alberta opportunity company reports to the Legislature
through the Minister of Economic Development and Tourism.
The purpose of Alberta Opportunity Company is
to provide financial assistance and guidance for the
development of Alberta business.
Table of Contents
Report from the Directors 2
Financial Statements
Auditor's Report 5
Balance Sheet 6
Statement of Revenue and Expense 7
Statement of Changes in Financial Position 8
Notes to the Financial Statements 9
Authorizations for Fiscal Year 1 994 17
Loans, Guarantees & Equity Investments 18
Board of Directors 19
Executive Officers 19
Branch Offices 20
Report from the Directors
The Year Ended March 31,1 994, saw the small business
community of Alberta continuing to struggle after three years of
recession. Also in this year, the difficult but necessary fiscal measures
taken by the provincial government led to major restructuring at
Alberta Opportunity Company.
With regard to the economy, we believe that a slow but steady
improvement took hold during the past year and that this trend is
continuing to grow. While there were, and still are, significant "soft
spots" in certain industry segments and in some geographic areas, we
believe that a good deal of underlying strength is evident, particularly in
the small business community.
In terms of operating results, the Company enjoyed some
successes; however, there were also some major disappointments.
Lending volume fell across the board, recording a 4% decline in
number of approvals and a 25% drop in the aggregate dollar amounts
approved. These disappointing results are attributed to a number of
factors, one of which is the continued reluctance of many small
business people to undertake expansion while we continue to struggle
with both the recession and government cutbacks. Another element
which had a major impact on our volume of applications was our
almost total withdrawal from advertising activities due to financial
restraint. While too late to impact the results of the year under review,
an advertising campaign undertaken in February and March, 1 994,
resulted in a very strong upsurge in both applications and approvals in
the beginning of our 1 995 Fiscal Year.
Early in the year our mandate was expanded to include the
Export Financial Assistance program which is designed to assist
Alberta manufacturers in obtaining working capital assistance to enable
them to compete in export markets. Also newly developed is a pilot
project to provide economic development assistance to communities in
the form of Local Opportunity Bonds. This program to provide an
alternative method of assisting Albertans to expand the non-
metropolitan economic base will be handled by both AOC and AFSC
(Agricultural Financial Services Corporation).
Activity in the Consulting Department remained strong through-
out the year. Assistance was provided to a total of 336 small
businesses in the areas of marketing, plant layout and design,
management accounting and systems analysis. While this type of
assistance will continue to be available to both borrowing and
non-borrowing clients in the future, it w ill now be undertaken on a
fee-for-service basis.
In common with all provincial government departments and
agencies, AOC completed and had approved its three-year business
plan for the period ending March 31, 1997, which will see the
Company reduce the level of financial support which it r equires from
government by more than 30% by the end of the three-year period. In
order to achieve this ambitious goal without diminishing our ability to
fulfill our primary mandate, lending to small business, a significant
reduction in staffing was required. The result was the closure of our
Corporate Marketing Department and the decision to withdraw fully
from the seed and venture investment field. There has also been a
general reduction in staffing throughout the Company including the
closure of our Lloydminster Branch. In addition, fees for our
management consulting services and application fees on all loan
applications were implemented at the commencement of the new
fiscal year.
The outlook for Fiscal 1 995 is quite positive. In spite of our
financial difficulties we have been able to maintain our capacity to
provide the same broad range of alternative financing to the small
business community of the province. While we regret the loss of our
capability to continue providing the same opportunities for
entrepreneurial education and growth as we have in the past, we
continue to work with other agencies and the private sector in the
hope that worthwhile replacements for these conferences and
seminars can be developed. Also, we believe that the small business
entrepreneurs of Alberta recognize the strong value provided by
AOC's business consultants, and that the resultant demand for their
services will enable us to maintain this very valuable service. As we
mentioned earlier, the demand for loans has been very strong thus far
in the new year which we believe reflects both the continuing need for
imaginative small business financing and the rapidly returning
confidence of the entrepreneurs in Alberta's small business
community.
In closing, the Board acknowledges the invaluable contribution of
the staff in seeing the Company through this difficult period. AOC has
been fortunate in having been able to attract and retain exceptionally
capable, dedicated and enthusiastic people, a circumstance which
allows us to face the future with full confidence in our ability to meet
the new challenges ahead.
Auditor's Report
To the Board of Directors of the
Alberta Opportunity Company
/ h ave audited the balance sheet of the Alberta Opportunity
Company as at March 3 1, 1994 and the statements of revenue and
expense and changes in financial position for the year then ended.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I c onducted my audit in accordance with generally accepted
auditing standards. Those standards require that I p lan and perform an
audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
In my opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
March 31, 1994 and the results of its operations and the changes in
its financial position for the year then ended in accordance with
generally accepted accounting principles.
CA
Acting Auditor General
Edmonton, Alberta
May 13, 1994
Balance Sheet
March 31,1994
(in thousands)
1993
1994
ASSETS
Cash $ 8,306 $ 11,628
Accounts receivable 86 99
Property held for sale (Note 4)
1,032 1,702
Loans receivable (Note 5) 80,256 96,825
Venture investments (Note 6)
922615
Seed investments (Note 7) 2,627184
480 597
Capital assets (Note 8)
$ 91.346 $113.743
LIABILITIES AND ACCUMULATED DEFICIT
Accounts payable and accrued expenses $ 944 $ 1,480
Bank guarantees called 683 1,575
Subordinated notes payable (Note 9) 12,294 15,756
Long-term debt (Note 1 0) 105,868 128,362
1.121 :
Pension obligations (Notes 3 and 11)
120,910 147,173
Accumulated deficit (Notes 3 and 1 2) (29.564) (33,430)
$ 91.346 $113.743
The accompanying notes are part of these financial statements.
Statement of Revenue and Expense
for the year ended March 31, 1994
(in thousands)
1994 1993
Budget
Actual Actual
(Note 19)
REVENUE:
Interest $ 11,916550 $ 10.125 $ 14,206
Conference income 151 160
Grant from the Province of Alberta for the
assistance of small business 17.500 17.500 14.100
27.776 28.466
29.615
EXPENSE:
Interest 12,130 11,812 14,371
Operations (Notes 1 3 and 1 4) 9,193 8,416
Provision for doubtful accounts and loss on 8,754
realization (Note 1 5)
5,107 2,605 4,601
Loss (income) on property held for sale
(Note 1 6) 200 (17)
247
26.630 22.816 27.973
NET INCOME FOR THE YEAR $ 2.985 $ 4.960 $ 493
Statement of Changes in Financial Position
for the year ended March 31 , 1994
(in thousands)
1994 1993
Budget Actual Actual
(Note 19)
Cash provided by (used for):
OPERATIONS
Net income for the year $ 2,985 $ 4,960 $ 493
Non-cash items:
Provision for doubtful accounts and
loss on realization
Amortization 5,211057 2,610553 4,610511
Pension 27
IL U nbcoc \(r y\azl\l\rl\/\ rU\N n nf JrIrU\ fnJpC Irli*y\ / 200 (199) (1)
Bad debt recoveries 400 614 558
riUfJCiLy MtJIU IUI bale.
(700) (730)
Acquisitions (789)
500 414
Disposals
1,466
Loans receivable:
Disbursed (30,000) (21,597) (28,346)
Repaid 28,000 37,623 43,276
Venture investments:
Disbursed (764) (659)
(1,300)
frfimin 200 227 414
nepdiu
Seed investments:
L/isuurscu (7001 (480) (624)
100 239 57
Repaid
(892)
Ddllrx yudl dl llcco Lalluu (1,750) 148
Other (1.199) (559)
2.058 22.634 19.752
FINANCING
Subordinated notes:
Issued
2,000
2,000
Repaid (4,583) (3,462) (6,559)
Long-term debt:
Issued 20,000 10,000 30,000
(20.102) (32.494) (43.429)
Repaid
(2.685) (25.956) (17.988)
Increase (decrease) during the year (627)
(3,322)
1,764
11.628 11.628 9.864
Cash at beginning of year
Cash at end of year $ 1 1 .001 $ 8.306 $ 11.628